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Fund Fees and Expenses

Investment carriers pay for their operations by assessing fees on their investment funds. The fees are subtracted from the investment returns or earnings of those funds. The combination of these fees will generally equal a fund’s expense ratio, which is reported as a percent of assets under management.

There are no sales charges or loads on any TIAA or Fidelity Investments proprietary funds offered through the U-M plans. All transaction fees (ex. for taking a loan, cash withdrawals, etc.) have been waived and there are no account maintenance fees. In addition, U-M does not pay any fees to TIAA or Fidelity Investments.

All CREF variable annuities, TIAA mutual funds, and the Fidelity Investment Freedom Index Funds through U-M plans are offered at the lowest-cost share class available. Twenty-nine Fidelity mutual funds are offered through the Class K shares which have lower fees than the non-Class K share class available to the general public. In addition, the 14 Vanguard mutual funds available through the TIAA and Fidelity recordkeeping platforms are offered at the lower-cost Institutional, Admiral, or Investor share classes. Low fees mean more of your money remains in your account, working toward your financial future, and your retirement account balances have more earning potential.

The ticker symbols and net expense ratios for the U-M designated default investment funds, TIAA-CREF Lifecycle Index and Fidelity Freedom Index, are listed below. Details about all fund choices are available from each investment company's website.

Types of Fees

The following are common fees and expenses assessed by investment carriers. Information on a fund's current and historical invesment performance, as well as a breakdown of the fees assessed by TIAA and Fidelity Investments for their funds, may be found in each fund’s prospectus. A fund prospectus may be requested by phone or downloaded from each carrier’s website. In addition, you may also provide direction on your investment choices by calling TIAA and Fidelity Investments or through their secure websites.

This covers the cost of professionally managing the portfolio holdings. The fee varies by the investment style of the fund (indexing vs. active management) and type of investment. Sector funds that specialize in a particular segment of the economy (gold, financial services, etc.) usually have higher fees than general equity funds. International equity funds generally have higher fees than comparable domestic funds. Bond and money market funds are generally the least expensive to manage.

Annuities offered by insurance companies charge this fee to offset the expense and risk assumed to provide contractual guarantees, such as guaranteed lifetime income. This fee does not apply to mutual funds.

Many carriers impose a fee on participants who sell fund shares shortly after purchasing them as a means to discourage market timing. A participant who repeatedly purchases and redeems fund shares to take advantage of short-term fluctuations in a fund’s share price will drive up expenses for all fund participants due to the associated costs of having to buy and sell the portfolio holdings and also reduces investment returns.

The following types of fees are not assessed or have been waived by TIAA and Fidelity Investments for its funds offered through the University of Michigan retirement savings and 457(b) plans:

Transaction

This is a fixed-dollar fee subtracted from a participant’s account for transactions such as taking a loan or cash withdrawal.

Wrap

Wrap fees are charged as a percent of a fund’s assets and pay for various services not covered by the investment management and 12b-1 fees.

Account Maintenance

Carriers sometimes charge a fixed-dollar account maintenance fee, typically for accounts or plans with small balances.

Loads and Charges

Loads and charges can be assessed when shares in a fund are purchased, sold, or a combination of both. This fee is paid to the broker that sells the mutual fund and typically is assessed as a percent of the fund price. A fund may charge a fee for redemptions and exchanges for other funds offered by the same investment carrier in lieu of loads.

Purchase, Redemption, and Exchange

Some investment carriers charge a fee when a person buys shares of a fund, sells those shares, or exchanges those shares for those of another fund within the carrier. Unlike sales loads and charges, these fees are paid to the fund and not a broker.

Several types of fees have been waived by TIAA and Fidelity Investments for the University of Michigan. You may incur these and other fees if you rollover accumulations out of the U-M plans and into an investment carrier through another employer’s retirement plan or through an IRA. Check with any investment carrier with whom you intend to rollover accumulations to determine the types of fees you will pay and the expense ratios you will be assessed on the investment funds you choose.

Questions About Your Benefits?

Limitations

The University of Michigan in its sole discretion may modify, amend, or terminate the benefits provided with respect to any individual receiving benefits, including active employees, retirees, and their dependents. Although the university has elected to provide these benefits this year, no individual has a vested right to any of the benefits provided. Nothing in these materials gives any individual the right to continued benefits beyond the time the university modifies, amends, or terminates the benefit. Anyone seeking or accepting any of the benefits provided will be deemed to have accepted the terms of the benefits programs and the university's right to modify, amend, or terminate them. Every effort has been made to ensure the accuracy of the benefits information in this site. However, if any provision on the benefits plans is unclear or ambiguous, the Benefits Office reserves the right to interpret the plan and resolve the problem. If any inconsistency exists between this site and the written plans or contracts, the actual provisions of each benefit plan will govern.